Bill Eagen

1
Extending the Lean Enterprise
Bill Eagen EMEA Purchasing DirectorDELPHI
AUTOMOTIVE SYSTEMS
6th International Automotive Conference 14th -
16th October 2003Sunderland, UK
2
Leading Global Auto Supplier
Total Delphi
Manufacturing sites Employment Joint
ventures Technical centers
167 189,000 42 32
Europe Middle East
U.S. Canada
Manufacturing sites Employment Joint
ventures Technical centers
59 48,000 10 10
Manufacturing sites Employment Joint
ventures Technical centers
48 59,000 5 14
Asia Pacific
Mexico South America
Manufacturing sites Employment Joint
ventures Technical centers
13 5,000 18 4
Manufacturing sites Employment Joint
ventures Technical centers
47 77,000 9 4
As of 03/31/03
3
EMEA Footprint
NETHERLANDS
- Wholly-Owned 1
BELGIUM
- Wholly-Owned 1
LUXEMBOURG
- Technical Center 1
FRANCE

• - Wholly-Owned 12
• Joint Ventures 2
• - Technical Centers 3

4
Global Supply Base

• Metallic
• Aluminum
• Cable
• Castings
• Copper
• Fasteners
• Forgings
• Lead
• Machined Parts
• Powder Metal
• Springs
• Stampings
• Steel
• Tubing

• Electrical/Electronics
• Actives
• Electronic Assemblies
• Bearings
• Motors Actuators
• Passives
• Sensors
• Switches
• Solenoids Coils
• Audio Communications

5.2 BIL.
4.3 BIL.
4.2 BIL.

• Suppliers  Sites
• North America 3785
• Europe 2182
• Asia 470
• South America 368
• TOTAL 6805

• Chemical
• Airbags
• Connectors
• Harness Coverings
• Plastic Components
• Rubber Die Cut Foam
• Resin

5
The Game is Changing
6
The Case for Lean
Always Lean

Over Capability
Demand
Short

Capability
No over capability ! No short capability This is
our Business.
Lean Minimum Gap (Demand vs. Capability)
7
Delphi Heritage

• Through 1996 had implemented
• Quality Network
• Synchronous Manufacturing
• NUMMI Experience
• Crosby Quality College
• Joint Safety Effort and Results
• Past five years
• Focus on learning/Practicing TPS
• Writing own system/structure/processes
• Delphi Manufacturing System
• Common, global manufacturing system

8
Supplier Development Process
Delphi Manufacturing System
Focus Identification and Elimination of Waste
9
Delphi Shingo Prize

• 2003 Shingo Prize Winners
• Delphi Flint Operations
• Flint, Michigan
• Delphi Energy Chassis Systems,
• Sistemas Electricos y Conmutadores,
• S. A. de C. V. (SEC)
• Juarez, Mexico
• Delphi Delco Electronics de Mexico,
• Delnosa 1 4 Operations
• Reynosa, Mexico
• Delphi Packard Electric Systems,
• Plant 19
• Warren, OH

8 Other Delphi Plants have Won the Shingo Prize
in the Past
The Nobel Prize of Manufacturing
10

Extended Lean Enterprise

• For most, an opportunity waiting to happen
• Not about squeezing suppliers
• Not about getting prices down
• ALL about
• Getting costs out of processes
• Getting costs out of parts
• Resulting in
• Reduced prices
• Strong, competitive supply base

11
Strategic Sourcing
High

• NEAR CORE
• Unique systems/modules
• 80 160 suppliers
• Less tailored than core

• CORE
• Strategic systems/modules
• 30 60 suppliers
• Long term relationships
• Early involvement
• Cost/technology sharing

EXECUTIONAL RISK

• COMMODITY
• Generic commodities
• Traditional sourcing approaches
• Competitive tension

• SMALL NICHE
• High value, low risk commodities
• Traditional sourcing approaches
• Cost sharing

Low
VALUE
Low
High
12
Price Pressure
Average Price Cut Demand 4.1
Source Automotive News Europe (21 April 2003)
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Cost Management

• Identify best-in-world cost
• Establish new and even lower level of cost
• Achieve best in world cost
• Collaborate
• Share savings
• Improve Delphi and Supplier margins

14
International Procurement Organization

• Objective
• Convert procurement footprint to Low Cost
  Countries
• Balance APV in each region
• Eastern Central Europe
• Asia Pacific
• Mexico South/Central America
• Protect the Delphi Customers from quality/supply
  issues
• Tools
• Total Cost Analysis / Value Streams that make
  sense
• Manufacturing Footprint (future)
• Customer Requirements
• Make vs. Buy
• Expectations
• Lower current material cost
• Reduced cost models (target costs) to increase
  divisional product competitiveness
• Acquire export credits to support manufacturing
  Footprint

15
Cost Management
16
Lean Supplier Development

• Effective Supplier Development requires supplier
  and customer to
• Share technology
• Share risk
• Share benefits
• Share accountability

17
Example
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Extending the Lean Enterprise
Bill Eagen EMEA Purchasing DirectorDELPHI
AUTOMOTIVE SYSTEMS
6th International Automotive Conference 14th -
16th October 2003Sunderland, UK